Question

In its current year income statement, Cere Co. reported income before income taxes of $300,000. Cere estimated that, because of permanent differences, taxable income would be $280,000. During the year Cere made estimated tax payments of $50,000, which were debited to income tax expense. Cere is subject to a 30% tax rate. What amount should Cere report as income tax expense

Answer 1

The amount that Cere should report as income tax expense is $84,000.

Income tax expense refers to the amount of taxes owed by a person to the taxing authority.

• The Formula for Income tax expense is Taxable income * Effective tax rate.

Given Information

Taxable income = $280,000

Effective Tax rate = 30%

Income tax expense = $280,000  * 30%

Income tax expense = $84,000

Therefore, the amount that Cere should report as income tax expense is $84,000.

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